Ohio Retirement System Raises Concerns to Permira About Hugo Boss Plans to Close Cleveland Plant

Sen. Sherrod Brown letter to Permira describes "grave concerns"

CLEVELAND, March 2 /PRNewswire-USNewswire/ -- The Ohio Public Employees Retirement System (OPERS) has notified Hugo Boss' parent firm Permira Advisors that the retirement system "now has concerns about future involvement" with Permira. In total, OPERS has invested Euro 110 million in Permira, an amount equivalent to about $149 million today. In 2006, OPERS invested Euro 60 million, or $81 million, in Permira IV, the name of the particular investment fund that includes Germany-based Hugo Boss.

Workers, as well as public and labor officials, contend that Hugo Boss did not bargain in good faith in trying to keep the plant open. Nearly 400 jobs are at stake; the Brooklyn, Ohio, plant is supposed to close in April.

OPERS is now demanding that the company re-engage public officials, who have already offered financial incentives to keep the suit-making factory in business.

Workers United, the union representing the plant's workers, is approaching other public employee retirement systems – including funds in Pennsylvania, Massachusetts, New Hampshire, Texas and California – and is urging them to re-evaluate investments in Permira.

On February 25, OPERS chairman Ken Thomas and CEO Chris DeRose wrote to Permira and demanded a response by March 11. The letter reads, in part:

"The OPERS Board noted that the investment performance of Permira IV has underperformed our expectations and is inconsistent with the reputation of your institution. Due to the poor performance of the fund and representations to the Board that VFG, Italy (Hugo Boss) did not bargain in good faith with state and local community partners, the Board now has concerns about future involvement with your institution. In the interest of improving the overall performance of Permira IV, OPERS urges you to reengage both local and state officials to evaluate profitable alternatives to the closure of this facility."

Click below to read the entire letter:

http://www.workersunitedunion.org/sites/workersunitedunion.org/files/2010_0225_Letter%20to%20Permira_Final.pdf

Separately, U.S. Senator Sherrod Brown (D-OH) wrote to Permira urging the company to reconsider its decision. His letter reads, in part:

"I have grave concerns when hearing stories of private equity firms such as Permira loading their portfolio companies with debt, closing U.S. production facilities, and reaping high returns – all at the expense of American workers. Such behavior has played a significant role in creating the challenging economic climate our nation currently faces. It is even more troublesome to hear that public and private pension programs are entrusting funds to firms that engage in such behavior."

Click below to read the entire letter:

http://www.workersunitedunion.org/sites/workersunitedunion.org/files/Senator%20Sherrod%20Brown%20Letter%20to%20Permira.pdf

Background on situation at Hugo Boss plant in Brooklyn, Ohio: On December 29, Hugo Boss announced it would be closing its Brooklyn, Ohio manufacturing plant and shipping the jobs there overseas. The company had been seeking to cut average wages from about $12 per hour to about $9 per hour. It had also been drastically cutting the hours of its workers. Right in the middle of negotiations, Hugo Boss shocked workers, union leaders, and state and local officials by announcing that it would no longer negotiate and instead would close the plant permanently.

Hugo Boss sells high-end suits - some retail for about $1,500 - and can afford to manufacture in the United States. Their competitors make high-end suits in union factories in the U.S., Canada, and Italy with comparable costs.

Hugo Boss' decision was not based on economic necessity. The company is profitable and growing. It spends millions on ads and sports sponsorships like Davis Cup tennis, Indy Car Racing, sailing, golf and soccer.

In January, Workers United, the union representing workers at the plant, filed a federal Unfair Labor Practice complaint against Hugo Boss because Hugo Boss sought to circumvent its legal obligation to bargain with the union.

Workers United, SEIU is a union of 150,000 workers in the US and Canada who work in the manufacturing, distribution, laundry, food service, hospitality, gaming, apparel and textile industries. www.workersunitedunion.org

SOURCE Workers United